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Last week I argued that Atiku Abubakar’s promise to restore petrol subsidies had rattled President Bola Ahmed Tinubu because it had finally opened a political front on which the president is extremely vulnerable. Subsequent events strengthened my belief. Tinubu went from deriding Atiku’s proposal as evidence of “gross ignorance” on matters of governance and economics, to suddenly talking about the imperative of lowering transport costs and ensuring Nigerians benefit from cheaper fuel.
After meeting with governors this week, Tinubu announced an accelerated rollout of CNG infrastructure and said, “We agreed that cheaper fuel should mean cheaper rates!” His government wants lower transport fares from 1 October.
Atiku wants to achieve affordability through petrol subsidies. Tinubu wants to achieve this through CNG and state intervention in transport tariffs. Behind the differences in method lies an unexpected convergence: both men now admit that Nigerians need affordable energy and transportation. This is progress!
Tinubu once knew this without the benefit of Atiku’s suggestion. During his January 25, 2023 presidential campaign rally in Abeokuta, he said: “I will reduce the price of fuel. Rest assured that I will solve the fuel crisis.” He later repeated the promise more succinctly: “We will reduce the price of fuel.” These are helpful quotes to remember now that the government treats cheap gasoline as an economic abomination.
The difference between candidate Tinubu and President Tinubu is that the latter has become a prisoner of the subsidy removal fundamentalists’ narrative hegemony. Since Atiku and Peter Obi had also promised to eliminate petrol subsidies in 2023, there was no formidable political voice challenging the ideological consensus.
The victims of politics complained, but the political elite and their neoliberal supporters told them that their suffering was necessary, temporary, and ultimately redemptive.
Tinubu came to understand “reform” almost exclusively as the infliction of pain on ordinary people. Then, after taking the oath of office, he lit a fire under Nigerians, roasted them slowly while government officials who revel in sybaritic largesse tell Nigerians that being cooked alive is an investment in a glorious future. When Atiku promised to save Nigerians from the fire, Tinubu and his supercharged supporters warn that extinguishing the fire would wipe out the gains they have made from being roasted.
This mentality is peculiar because governments around the world recognize that the cost of energy and mobility cannot simply be abandoned to the mercy of the market. In much of Europe, governments heavily subsidize mass public transport, which reduces the need to own a private car. Canada does much the same. Brazilian cities spend public money to keep bus fares below their total economic cost.
The United States has a more automobile-centric model, so the political system is extraordinarily sensitive to gasoline prices.
Years ago I cited an instructive example from Iowa. A citizens committee recommended that the state raise the gas tax from eight to ten cents a gallon because it desperately needed money for roads and bridges. Gov. Terry Branstad rejected the recommendation and directed his Department of Transportation to look for savings.
His spokesperson explained that the legislature does not want to impose an additional burden on taxpayers. Imagine it. The government needed money for infrastructure and decided that its citizens should not be squeezed any harder to provide it.
Nigerian governments regularly reverse this order. For Nigerian political elites and their supporters, citizens must first be impoverished so that the government can become richer and build infrastructure for poor citizens. Yet only the living use the infrastructure. You don’t starve people today because you hope to give their ghosts world-class highways tomorrow.
There is also a lot of semantic deception in discussions of energy subsidies. Call them subsidies, oil tax breaks, gasoline tax exemptions, public transportation subsidies, or something else entirely. What matters to ordinary people is the result.
A widely cited estimate from the Center for Investigative Reporting once put the “true cost” of gasoline in the United States at about $15 a gallon including pollution, government spending and other socialized costs, although motorists paid a fraction of that at the pump. The point is that societies make political choices about who bears the full cost of energy and mobility.
Nigeria made a particularly cruel choice. It is an oil-producing country with a woefully inadequate mass transit system, unreliable electricity that forces families and businesses to generate their own power, and an economy where almost everything moves by road. Eliminating oil subsidies in one fell swoop under such conditions was bound to transmit price shocks to food, transportation, manufacturing, and almost every area of economic life.
The government, however, boasts that governors are richer as a result. This is one of the most revealing advertisements of Tinubu’s reverse Robin Hoodism. Robin Hood, according to legend, robbed the rich to help the poor. Tinubu’s economic philosophy drains resources from the poor to fatten governments and people who were already insulated from hardship.
State governments now receive historically large appropriations, and this is offered as evidence that subsidy removal works.
Well, according to a recent report, 33 states spent more than ₦500 billion in the first six months of this year on government buildings, governors’ offices, related executive administration, travel and transportation. Of course, every naira in these categories is not spent on the self-indulgence of the governor. However, there is something perversely revealing about celebrating the bloated liquidity of state coffers while the domestic economies that have financed this liquidity through dramatically higher gasoline prices are bleeding.
Tinubu recently buttressed this point with a quip about the days when some governors could not pay salaries. He recalled the “half salary” governor of Osun, an unmistakable reference to Rauf Aregbesola. Aregbesola’s modulated wage scheme was indefensible and caused real hardship. But Tinubu was half-smart because nominal salaries are meaningless unless you ask what they can buy.
Nigeria’s overall price level has risen so rapidly since the Aregbesola years that ₦50,000 in 2017 had about the purchasing power of about ₦237,000 today. So, if a senior civil servant whose full salary was ₦100,000 received ₦50,000, that paltry half-salary could buy roughly what ₦237,000 buys today. Unless the worker’s current salary exceeds this threshold, his famous “full salary” will leave him poorer in real terms.
Petrol makes Tinubu’s boast even more ridiculous. In 2017 the national average price of petrol was around ₦144 per litre. In May this year the average was almost ₦1,600. With an average salary of ₦50,000 in 2017, approximately 346 liters of petrol were purchased. A full salary of ₦100,000 today buys only about 63 litres. With half the salary you bought more than five times the amount of petrol compared to the full nominal salary.
In other words, “we now pay full salaries” is empty propaganda without reference to purchasing power. A pumpkin full of worthless pebbles does not become more valuable than half a golden pumpkin just because it is full.
If time travel were possible, millions of Nigerians would quickly return to the relatively happy years when less money took them further than more money takes them today. After all the economic chatter has dissipated, people judge governments based on the quality of their lives. Can they afford food? Can they go to work? Can their salary pay the rent? Can businesses survive? Are parents able to satisfy their children’s basic needs?
For years I have asked wide-eyed neoliberal jesters in and out of government, who demonize subsidies and worship cruelty as economic reform, to show me a country that developed by ruthlessly depressing the living standards of ordinary people, destroying their purchasing power and making basic energy prohibitively expensive while government officials wallowed in comfort. I’m still waiting because such a country doesn’t exist.
The task of a government worthy of the name is to make life a little less difficult for the weakest members of society. Tinubu calls the deliberate transfer of pain from the government to the poor “courage”. I’ve always called it reverse Robin Hoodism.
Atiku’s subsidy promise has at least forced Tinubu to rediscover a truth he knew when he wanted Nigerians’ votes in 2023: prohibitively expensive energy is bad for people and bad for the economy. I don’t agree on how to lower costs, but the discussion has already moved on. Nigerians are no longer told to simply rejoice that governors have more money and endure their misery for an indefinitely postponed tomorrow.
The debate is finally about how to make life accessible again. This is progress in a way, even if it took three years of disastrous “economic reforms” and an opposition politician’s campaign promise to bring Tinubu back to what he himself had once promised: “we will lower the price of fuel”.
Column published in the Saturday Tribune
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